Family offices slow private equity investment; limited partner deals in decline

S&P Global Market Intelligence offers our top picks of global private equity news stories and more published throughout the week.

Family offices have slowed investment in private equity on a median basis for two years, data from Preqin shows. Median allocation by family offices globally reached as high as 20% in 2021 and was 16% at the end of 2023.

The decrease results from a hesitancy to add more illiquid assets after a big wave of illiquid investments from 2010 to 2020, said William Marr, senior managing director of the wealth management group at hedge fund Welton Investment Partners LLC, to S&P Global Market Intelligence.

Many family offices have subsequently reached their allocation limit for illiquid investments in their portfolios, Marr said.

The slide in allocation may be short-lived. Family offices "continue to express the desire to have increased exposure to private equity and private credit," said Matthew Weatherley-White, chief investment officer of investment adviser and wealth manager Align Impact LLC.

Read more about family office allocation to private equity.

CHART OF THE WEEK: Limited partners pull back from deals

⮞ Limited partner investments, including direct stakes and coinvestments with private equity, showed a two-year decline in 2023, with the largest decrease in direct stakes.

⮞ A lackluster deal environment resulting from high interest rates, hefty valuations, increasing bid-ask spreads and heightened regulatory scrutiny was behind limited partner caution in 2023.

⮞ Pension funds, family offices and endowments are expected to make future allocation decisions with heightened emphasis on the investment strategy and focus of a private equity fund and the track record of the general partner.

TOP DEALS AND FUNDRAISING

– Silver Lake Technology Management LLC agreed to buy Endeavor Group Holdings Inc. for $27.50 per share in cash. The take-private transaction values the sports and entertainment company's equity at $13 billion.

– Advent agreed to take Montreal-based payments company Nuvei Corp. private for US$34 per share in cash. As part of the $6.3 billion deal, Nuvei Chairman and CEO Philip Fayer, Novacap TMT and Caisse de dépôt et placement du Québec will retain stakes in the company.

– SK Capital Partners LP raised $2.95 billion for its SK Capital Partners VI fund at final close.

– Main Capital Partners BV pulled in a total of €2.44 billion in capital commitments at the close of its two buyout funds. The Main Capital VIII fund collected €1.9 billion, while the Main Foundation II fund secured €500 million.

– Tiger Global Management LLC raised $2.2 billion at the close of its latest venture capital fund, London's Financial Times reported April 2, citing a person with knowledge of the deal.

– Clarion Capital Partners LLC closed its fourth fund with $677 million in total capital commitments. The Clarion Investors IV LP fund will focus on buyouts of lower midmarket companies.

– Grafine Partners LP secured about $600 million in capital commitments at the close of its inaugural strategy. The Grafine Capital I LP strategy will provide limited partner capital to first-time funds launched by private markets investors in exchange for revenue sharing and access to coinvestment opportunities.

– Warren Equity Partners Manager LP brought in more than $550 million at the close of its Warren Equity Partners ELIDO Fund II LP and Warren Equity Partners ELIDO Fund II-A LP fund. The fund will invest in lower-middle-market companies focused on the operations and maintenance of critical infrastructure.

MIDDLE MARKET HIGHLIGHTS

– Broad Sky Partners LLC made a strategic investment in heating and air conditioning company Punctual Pros, a franchisee within Authority Brands LLC.

– Blue Wolf Capital Partners LLC agreed to buy seven manufacturing and development facilities in Sweden, France and Spain from contract development and manufacturing organization Recipharm AB (publ). The transaction is expected to close in the fourth quarter.

– Blue Sage Capital LP closed on its investment in metal component company American Alloy LLC.

FOCUS ON: HEALTHCARE EQUIPMENT AND TECHNOLOGY

– Funds managed by KKR & Co. Inc. added insurance distribution and health plan markets-focused services platform SunFireMatrix Inc. to their portfolio.

– Medical technology company ViaLase Inc. raised about $40 million in a series C funding round. Venture Investors LLC's Venture Investors Health Fund 6 LP and Arboretum Ventures LLC participated in the round.

– UK-based cancer diagnostics company Biofidelity Ltd. secured $23 million in a series A+ investment round led by Octopus Ventures Ltd.

For further private equity deals, read our latest In Play report, which looks at potential private equity-backed M&A, including rumored transactions, each week.

For private credit news, see our private credit newsletter issued twice per month.